Untangling the web of EU regulation

17th of May 2013

Fresh moves are under way at EU level to remove the tangle of regulation choking business growth and the region’s economic recovery. Hartley Milner looks at some of the most burdensome laws on the hit list.

It appears our leaders found time at their recent summit for a little soul-searching. The outcome was recognition of a grievance hard-pressed SMEs have harboured for a good many years – that legislation from Brussels and applied nationally is placing a disproportionate burden on their shoulders.

After all, small and medium-sized enterprises create 85 per cent of all new jobs across Europe and employ two thirds of the EU’s workforce. Critically for lifting the region out of the doldrums, they also contribute significantly to innovation and growth.

So the European Commission has been told to set out in June how it would reduce the burden of regulation for the struggling sector.

Ahead of the European Council summit in March, the Commission published the results of a consultation with more than 1,000 SMEs and their representative organisations. The laws respondents most wanted reformed were:

The Commission will now set about screening these and other areas for “burdens, gaps and inefficiencies” via its Regulatory Fitness and Performance Programme, launched last December.Much has already been done by the Commission to simplify life for smaller businesses through its ‘think small first’ policy and smart regulation agenda to promote growth and job creation.

Among the measures most welcomed by businesses are moves to reduce payment deadlines and to enable more companies to benefit from simplified accounting and auditing regimes. Another new innovation is an annual scoreboard tracking the progress of SME-relevant legislation. It also shows how the Commission’s proposals to reduce the impact of regulation are followed up by member states, as more than a third of the administrative burden is added at the implementation stage.

European commissioner for industry and entrepreneurship Antonio Tajan said: “SMEs, which are creating the lion’s share of all new jobs in Europe, are the key to getting out of this crisis. Our legislation needs to be designed with SMEs – and especially new entrepreneurs – in mind. It must be smart, it must be simple and it must be stable.

“The better we listen to SMEs’ concerns the better they can help us return to growth.”

However, leading employer group the European Association of Craft, Small and Medium-sized Enterprises questions whether Brussels policy-makers are as in tune with these concerns as they claim.

Enterprise policy director Luc Hendrickx said: “The communication has some good points and some shortcomings. On the plus side, the Commission seems to have shelved its plans to exempt micro enterprises by default from EU rules and has come up with a much more sensible case-by-case approach. It is also clearly taking smart regulation to heart and has obviously understood the need for SMEs to operate in a regulatory environment that respects their needs and lets them create growth and jobs.

“On the other hand, it is high time for Parliament and Council to get on board. Just to give two recent examples, the Parliament risks seriously worsening what the Commission has suggested on a new legal framework for data protection in Europe, while the good proposals made by the EC to ensure greater and easier participation of SMEs in public tendering are now in the hands of both Parliament and Council, who disagree on several crucial provisions for reaching this goal. Smart regulation will only be achieved if all the EU institutions paddle in the same direction, which is not always the case.”

Think small first

Hendrickx continued: “Last but not least, the ‘think small first’ principle is mentioned only in passing in the communication. This is regrettable, since the full application of this principle at all levels would be the most logical and straightforward route to smart regulation. Conceiving legislation only when really necessary and taking the smallest companies as the benchmark is a much better option than focusing on exemptions or ‘lighter regimes’.

“We hope the Commission will not put the ‘think small first’ principle on the back burner. This would send out the wrong signal to European SMEs, which are already under enough pressure from the current economic crisis.”

Top of the SMEs’ wish list of actions relates to the registration, evaluation, authorisation and restriction of chemicals (REACH), brought in to protect people and the environment from the use of chemicals. While no major overhaul is proposed to the basic provisions of the legislation, a review recommends easing the financial and administration burden it places on businesses.

The Commission has already acted to reduce fees and charges smaller enterprises have to pay to register chemicals. Depending on their size, SMEs could now benefit from reductions in standard registration fees of between 35 and 95 per cent and 25 to 90 per cent in relation to authorisation requests.

The prime concern for our sector is labour market legislation, particularly as it relates to health and safety, according to Andreas Lill, director of the European Federation of Cleaning Industries (EFCI). He called for a clearer, simpler regulatory framework that can be respected by both employers and employees.

Lill said: “Currently, you have a general directive on health and safety and more than 20 other directives tackling specific health and safety risks. We believe it would be better to have these specificities included in a single major health and safety directive rather than adding to them.

“More legislation just makes things even more complicated, because on the one hand you have the European directives and then on the other you have every country adding its own national legislation. So in our view it is not only the legal burden coming from Brussels but as well a question of national authorities patrolling the implementation of the existing legislation.”

On working time, Lill believes the cleaning industry can continue to live with the current directive in its broad form “very well”. Where change would be resisted relates to the special nature of cleaning work.

In general, the law says workers are entitled to continuous rest periods of at least 11 hours a day and 24 hours per week plus the 11-hour daily rest period. The EFCI fought hard to obtain a crucial derogation allowing cleaners to continue working full-time, but on a split shift basis, ie, early morning and late afternoon. To date, however, no changes to this concession have ever been proposed.

The revised regulation on recording equipment for road transport is an issue though. The Commission is proposing new rules on recording equipment that it claims would benefit SMEs, because vehicles driven within a radius of less than 100 kilometres would not need to be fitted with a tachograph.

But Lill pointed out: “The risk is if vehicles are driven over that limit they will need a tachograph, which would cost businesses between 5,000 and 10,000 euros per vehicle. That is why we claim that the limit must be increased to 150 kilometres. Moreover, this new legislation should be limited to vehicles heavier than 3.5 tonnes, instead of 2.8 as the European Parliament wanted. And this is a concern for our industry as well as for other sectors whose main activity is not transport.”

He said the EFCI also had concerns about proposed changes to the way contracts are awarded under the new public procurement directive.

“We are happy with some issues, but not with others,” said Lill. “We are generally happy that it seems the lowest price criterion is suppressed and in fact does not exist anymore. The only criterion for the awarding of a public contract will now be the most economically advantageous offer, not the lowest price.

“The question that concerns us is what is included in this new criterion, this most economically advantageous offer. Of course, there is price, but what else is in there? This is the problem – we do not see a clear rule that in this criterion there should not only be the price.”

Late payment rules

However, Lill said the proposals on public procurement are still under discussion at EU level where the EFCI is seeking to influence the final outcome.

Of more immediate benefit to the cleaning sector are the new rules governing late payment. Since March 16, public authorities have been obliged to pay suppliers of goods and services within 30 days or, in “very exceptional” circumstances, 60 days – and then only if it can be justified and both parties agree.

“The problem had been that in most southern European countries cleaning contractors were waiting for between one and two years to be paid by public authorities. So they were acting as creditors for the public sector, which was completely crazy.

“We are happy that this new directive on late payment is now in force.”